Reference News Network, June 29 report - According to the Russian "Viewpoint" newspaper website, a survey of 75 central banks shows that they wish to adjust their fund allocations and abandon the US dollar, turning to gold and the euro. The trend of abandoning the US dollar as a reserve currency is intensifying. Why is the US dollar making more and more countries dissatisfied?

A survey conducted by the Official Monetary and Financial Institutions Forum (OMFIF) from March to May showed that the tariff policy implemented by US President Trump on April 2nd, "Liberation Day," affected the foreign exchange reserve policies of central banks. Trade wars have caused market volatility, and the prices of the US dollar and US Treasury bonds have fallen. This has forced global central banks, which hold tens of billions of dollars, to re-examine their capital flows, considering to abandon the US dollar and instead choose gold, the euro, and the yuan.

40% of central banks plan to increase their gold holdings over the next decade. According to OMFIF data, the US dollar was the most popular currency last year, but it has dropped to seventh place this year. At the same time, 70% of the surveyed central banks said that the political situation in the United States made them hesitant to invest in the US dollar. This proportion is more than twice that of last year.

It is expected that the euro will benefit the most from the decline of the US dollar. Among the central banks surveyed by OMFIF, 16% plan to increase their euro reserves within the next 12 to 24 months. This would make the euro the most popular currency, with the euro accounting for 7% of global foreign exchange reserves last year.

Data from the IMF blog shows that the share of the US dollar in global foreign exchange reserves has declined from over 70% in 1999 to 57.3% in 2023, a historical low.

Alexander Potapov, an analyst at Russia's Finam Investment Group, pointed out: "In recent years, most central banks in developing countries have turned their eyes to gold. Gold has surpassed the euro to become the second-largest asset in central bank reserves, with a share of 20% by the end of 2024. The share of the US dollar continues to decline, currently standing at 46%."

Today, the trade war initiated by the United States and the continuous growth of the US government debt are accelerating the process of de-dollarization globally.

Experts believe that the trend of de-dollarization will only become more evident. Professor Mikhail Gordyenko of the Department of Sustainable Finance at the Plekhanov Russian University of Economics stated: "Events where some African countries have restored sovereignty have driven these countries' central banks to increase their demand for gold. In addition, as many as one-third of the world's central banks plan to purchase more gold. All of this indicates that the global payment system is facing a crisis, and countries hope to prepare for the collapse of the current monetary system."

Vladimir Chernov, an analyst at Russia's Global Free Finance Company, said: "In my view, the main reason is not only due to political risks and sanctions or the precedent of Russia's foreign exchange reserves being frozen, but also because of the increasing importance of emerging countries in the global economy, changes in trade foreign exchange corridors, and a declining trust in the US dollar as a neutral reserve asset. I think this is not the collapse of the US dollar, but a slow and systematic transition of the global monetary system toward multipolarity."

Meanwhile, the US dollar has been losing ground in the first half of 2025. In the first quarter, the US Dollar Index (an indicator of the US dollar's exchange rate against a basket of major currencies) fell by 4.6%. The second quarter saw a larger drop of 5.3%. The index is now at its lowest level since the spring of 2022. However, the current weakness of the US dollar has not yet reached a critical stage.

Why are central banks around the world dissatisfied with the US dollar?

Chernov said: "The main reasons are the politicization of the US dollar, rising risks of sanctions, high volatility, and uncertainty in US economic policies. OMFIF's survey shows that 70% of the surveyed central banks indicated that the political situation in the United States made them hesitant to invest in the US dollar. The choice of alternatives depends on the direction of trade. If it is Asia, the Chinese yuan is the top settlement currency. If it is the West, the euro is a safer and more neutral currency. Gold, however, is a universal asset that transcends politics."

Chernov analyzed: "Over the next decade, gold will remain a key safe-haven asset, while the share of the US dollar will continue to decline. This will make developing countries less fearful of the exchange rate risks of the US dollar, enhance the role of regional currencies, and promote the development of cross-border settlements in local currencies. I believe the global monetary system is gradually shifting from a US-dominated system to financial diversification."

Gordyenko summarized: "The global monetary system has essentially moved towards multipolarity, requiring the improvement and adjustment of various payment mechanisms and tools. This process is already underway. In this multipolar system, gold is an undisputed universal asset that can provide security for a country's financial resources. The EU will still need the euro, provided that the EU's structure is maintained in the coming years." (Translated by Li Ran)

Original article: https://www.toutiao.com/article/7521275596173902336/

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